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Jul 13, 2018, 06:30am

With A Defined Go-To-Market Strategy, Legal Tech Can Conquer The Industry

Erin Harrison is Managing Director at Baretz+Brunelle, where she oversees the firm's legal technology practice.

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The most glamorous figure in the legal profession used to be the trial lawyer. Now it’s the nerd.

That may sound absurd to outsiders, but those who work in the legal profession will recognize the truth of this statement. Yes, there’s a romance to the trial lawyer’s work. We’ve seen the movies: the long nights of preparation, the dramatic cross-examinations, the soaring rhetoric. But in 2018, we’re less enthralled by a closing argument than artificial intelligence. “Legal tech” -- technology that performs lawyers’ work for them, or helps them do it better -- has become the talk of the bar, and for good reason.

For one thing, it’s cool. For risk-averse lawyers, the legal tech industry opens a door to the alluring world of technology startups. Suddenly, lawyers who have never done anything entrepreneurial are enjoying the thrill of running businesses with names like GravityStack, BCXponent and Fuse (Reed Smith’s technology spin-off, Bryan Cave’s legal tech consultancy and Allen & Overy’s legal tech incubator, respectively). Meanwhile, other lawyers are playing it even riskier, leaving Big Law behind for a shot at becoming the legal profession’s Mark Zuckerberg.

For another thing, legal tech is growing. The nation’s largest law firms just posted their best financials since 2010; after years of negative or stagnant growth, revenue is up 5.5% at the nation’s 100 largest firms, according to The American Lawyer. But they still can’t approach the rapacious growth of legal tech. Numbers there are harder to come by, but consider this: Patent applications for legal technology increased nearly 500% from 2012 to 2016. Or this: the technology could perform up to half of the work being performed by junior lawyers today.

Revenge Of The Nerds

Even the above stats fail to capture the extent to which elemental forces in law are spurring interest in legal technology. While the rise of legal tech feels sudden, its ascendance into the mainstream can be traced back to the Great Recession. Pre-2008, times were good for law firms, which enjoyed an annual 4-6% growth in demand during the years prior. But then the downturn came, coinciding with a movement among corporate clients to push back on ever-climbing rates through initiatives like the Association of Corporate Counsel’s Value Champions. With demand shrinking and clients balking at formerly routine charges, law firms had to discover a new way to maintain profits while cutting costs.

Firms slashed expenses, slowed hiring and promotions and found other ways to streamline operations. The dirty secret of law firms was that they were paeans to inefficiency. Placing armies of first-year associates on legal research or document review projects used to make them money. Now, it might get them fired. Suddenly, tech tools that could create new efficiencies and make lawyers do their jobs better felt like a lifesaver rather than a threat.

The ongoing demand for efficiency is a tectonic shift, which explains why legal tech has emerged as the hottest thing in the $400 billion-plus U.S. legal market. It also explains why the world is there for legal tech’s taking. But are legal tech entrepreneurs prepared to seize it?

The Go-To-Market Problem

Legal tech, it turns out, has a dirty little secret of its own. The recent Legal Tech Go-to-Market Report conducted by my company, Baretz+Brunelle, suggests that no matter how much wind is at the back of legal tech firms, many have not prepared for takeoff.

Just as law firms had a blind spot for efficiency, the report reveals that legal tech firms have a blind spot for sound “go-to-market” strategies (by which I mean the entire process of selling a product into its market, including developing strategies for marketing, sales, public relations and product development). More than half of the survey’s respondents had little or no idea how profitable their products and services were. Without this understanding, it’s impossible to know which offerings they should put their energy behind.

Another eye-opener points to the scattershot sales approach prevailing in legal tech. When respondents were asked to whom they directed their sales efforts, they identified a large range of individuals. This speaks to confusion about who their real customers are. Bob Ambrogi, who we respect, takes issue with our conclusion. When you survey a broad range of companies, he says, “it would follow that their customers would vary.” That might be true, but it’s beside the point. The distressing aspect of the survey is not the number of sales targets in the aggregate, but the fact that each respondent identified so many of them. Respondents cited 3.4 different sales targets, on average. More than 10% said they would sell to “anyone who would listen to us.” (We rest our case on that point, but plead guilty to Bob’s other criticism that Baretz+Brunelle does work for legal tech firms.)

The survey’s most powerful finding: 97% of respondents felt that the legal tech industry as a whole has no firm grasp of go-to-market strategy, or at best, a scattered one. This speaks for itself.

The leaders who think most critically about what products they should be selling, how they can most effectively sell them and to whom they should be selling them will experience the greatest success in the legal tech space.

Learning From The Trial Lawyer

Just as lawyers and nerds both have dirty secrets, they also may have something to teach each other. Lawyers are now eager to accept the efficiency lessons of legal tech firms.

For their part, legal tech companies may want to go back and watch some legal dramas. They could learn something from the arduous preparation that trial lawyers undergo before delivering their services to the market. They might learn something from the intensely strategic choices that go into an effective cross-examination. And they might learn something from trial lawyers’ keen awareness of their most important audience -- the jury. Preparation, strategic direction and an understanding of the customer is a good place to start when planning a go-to-market strategy.

By the time the movie’s over, the nerds might be ready to conquer the legal profession after all.

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